Problem 7-31A (Algo) Accounting for an installment note payable LO 7-5 The following transactions apply to Pecan Co. for Year 1, its first year of operations: 1. Received $31,000 cash in exchange for issuance of common stock. 2. Secured a $114,000 ten-year installment loan from State Bank. The interest rate is 5 percent and annual payments are $14,764. 3. Purchased land for $23,000. 4. Provided services for $105,000. 5. Paid other operating expenses of $49,000. 6. Paid the annual payment on the loan. Required a. Organize the transaction data in accounts under an accounting equation. b. Prepare an income statement and balance sheet for Year 1. c. What is the interest expense for Year 2? Year 3? Complete this question by entering your answers in the tabs below. Req B Inc Req B Bal Req A Stmt Sheet Req C Organize the transaction data in accounts under an accounting equation. (Enter any decreases to account balances is no effect on the Account Titles for Retained Earnings, leave the cell blank. Not all cells will require entry.) PECAN COMPANY Effect of Events on the Accounting Equation Assets Liabilities + Stockholders' Equity Event No. Note Common Cash + Land + Payable Stock Retained Earnings Account Titles for Retained Earnings Year 1 1 2 3. 4. 5. 6 Bal 0 0 0+ Complete this question by entering your answers in the Req A Req B Inc Stmt Req B Bal Sheet Req C Prepare an income statement for Year 1. PECAN COMPANY Income Statement For the Year Ended December 31, Year 1 Non-operating items: < Req A Req A Req B Inc Stmt Req B Bal Sheet Req C Prepare a balance sheet for Year 1. Assets PECAN COMPANY Balance Sheet As of December 31, Year 1 Total assets Liabilities Total liabilities Stockholders' Equity Total stockholders' equity Total liabilities and stockholders' equity < Req B Inc Stmt $ 0 L 0 69 $ 0 0 Req C > Complete this question by entering your answers in the Req A Req B Inc Stmt Req B Bal Sheet Req C What is the interest expense for Year 2? Year 3? (Round your ar Interest expense Year 2 Year 3 < Req B Bal Sheet